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Blueknight Announces Sale of Three Asphalt Terminals to Ergon, Amends Credit Facility and Completes Oklahoma Pipeline Repair – Oil & Gas 360

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Blueknight Announces Sale of Three Asphalt Terminals to Ergon, Amends Credit Facility and Completes Oklahoma Pipeline Repair

Blueknight Energy Partners, L.P. (“BKEP” or the “Partnership”) (NASDAQ:
BKEP) (NASDAQ: BKEPP) announced today that it has entered into an Asset
Purchase Agreement (“Purchase Agreement”) with Ergon Asphalt &
Emulsions, Inc. (“Ergon A&E”) to sell three asphalt terminals located in
Lubbock and Saginaw, Texas and Memphis, Tennessee to Ergon A&E for a
purchase price of $90.0 million in cash (the “Asset Sale”). Net proceeds
from the Asset Sale will be used to reduce outstanding indebtedness
under BKEP’s credit facility. The transaction is subject to normal
closing conditions and regulatory approval and is expected to close upon
the expiration or earlier termination of the HSR waiting period.

Ergon A&E is an affiliate of Ergon, Inc. (“Ergon”), which indirectly
owns (i) 100% of Blueknight Energy Partners G.P., L.L.C., the general
partner (the “General Partner”) of the Partnership and (ii) 27.5% of the
limited partnership interests in the Partnership. Accordingly, the
Conflicts Committee of the Board of Directors of the General Partner
reviewed and evaluated the Purchase Agreement to determine whether to
grant special approval of the Purchase Agreement and the Asset Sale. The
Conflicts Committee retained independent legal and financial advisors,
Potter Anderson & Corroon LLP and Evercore, respectively, to assist with
the evaluation of the terms of the Purchase Agreement and Asset Sale.
The Conflicts Committee unanimously approved the Purchase Agreement and
the Asset Sale.

In addition, BKEP amended its credit facility to, among other things,
(i) permit the Asset Sale, (ii) permit BKEP to make up to a $55.0
million investment in the previously announced Cimarron Express joint
venture, (iii) reduce commitments under the credit facility from $450.0
million to $400.0 million, (iv) limit distributions by the Partnership
to $10.7 million per quarter until December 31, 2019, and (v) provide
financial covenant relief, all subject to the terms and conditions of
the credit facility amendment.

Additional information regarding the Asset Sale and the amended credit
facility will be contained in a Current Report on Form 8-K to be filed
with the Securities and Exchange Commission on June 29, 2018.

Comments from BKEP CEO Mark Hurley:

“These transactions and actions we are announcing today represent the
culmination of the plan outlined in our first quarter earnings
conference call. We are committed to taking the steps necessary to
better position BKEP for future growth. The sale, along with an
anticipated 30% reduction in the cash distributions to our common
unitholders, decreases leverage and provides additional financial
flexibility. We are encouraged by the recent strengthening of crude oil
commodity prices, which has correlated to increased opportunities for
crude oil transportation even though crude oil storage remains
challenged. In fact, the now completed restoration of service to our
previously out-of-service pipeline in Oklahoma, has nearly doubled our
pipeline capacity. Demand exists, and we are aggressively pursuing
volume in the area with the expectation that we will begin transporting
in July. The repaired pipeline will primarily transport lighter crude
oils to Cushing that are dominant in the south-central part of Oklahoma,
which includes the active SCOOP and Merge regions.

“Let me express our appreciation to Ergon for its support of the
Partnership through the acquisition of the three terminals as well as
its participation with Kingfisher Midstream in the Cimarron Express
joint venture. The project to construct the new 16-inch diameter,
65-mile crude oil pipeline from northeastern Kingfisher County, Oklahoma
to BKEP’s Cushing, Oklahoma crude oil terminal is progressing well with
startup expected in mid-2019. We also appreciate our lenders agreeing to
amend our credit facility to provide additional near-term flexibility
and an avenue to purchase Ergon’s interest in the Cimarron Express joint
venture.”

Forward-Looking Statements

This release includes forward-looking statements. Statements included in
this release that are not historical facts (including, without
limitation, any statements about future financial and operating results,
guidance, projected or forecasted financial results, objectives, project
timing, expectations and intentions and other statements that are not
historical facts) are forward-looking statements. Such forward-looking
statements are subject to various risks and uncertainties. These risks
and uncertainties include, among other things, uncertainties relating to
the Partnership’s debt levels and restrictions in its credit facility,
its exposure to the credit risk of our third-party customers, the
Partnership’s future cash flows and operations, future market
conditions, current and future governmental regulation, future taxation
and other factors discussed in the Partnership’s filings with the
Securities and Exchange Commission. If any of these risks or
uncertainties materializes, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those
expected. The Partnership undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.

About Blueknight Energy Partners, L.P.

BKEP owns and operates a diversified portfolio of complementary
midstream energy assets consisting of:

  • 10.4 million barrels of liquid asphalt storage located at 56 terminals
    in 26 states;
  • 6.9 million barrels of above-ground crude oil storage capacity,
    approximately 6.6 million barrels of which are located at the Cushing
    Interchange terminalling facility in Cushing, Oklahoma;
  • 655 miles of crude oil pipeline located primarily in Oklahoma; and
  • 65 crude oil transportation vehicles deployed in Kansas, Oklahoma and
    Texas.

BKEP provides integrated terminalling, gathering and transportation
services for companies engaged in the production, distribution and
marketing of liquid asphalt and crude oil. BKEP is headquartered in
Oklahoma City, Oklahoma. For more information, visit the Partnership’s
web site at www.bkep.com.

Copyright Business Wire 2018

Source: on 2018-06-29 17:00:00

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